By CLINT SWETT
October 03, 2005
Entertainment companies - ranging from MTV to Napster and Disney to ESPN - are revving up to sell music, videos, news clips, games and even movie tickets to the world's nearly 2 billion cellular subscribers.
Unlike years gone by, the buzz at this week's Cellular Telephone & Internet Association, or CTIA, trade show isn't about cellular towers or the alphabet soup of wireless technology. Instead, it's about ring tones, music downloads and video clips, plus dozens of other cell phone add-ons that many experts see as the industry's future.
"At the end of the day, the mobile phone is the device you don't leave home without," said Motorola executive Alberto Moriondo. "It's like your keys or your wallet."
This convergence of technology and entertainment is fueled by the explosive growth of cellular phone service and increasingly sophisticated phones that can handle the new offerings.
With more than 196 million wireless users in the United States and nearly 2 billion worldwide, entertainment companies see a huge potential audience. And the wireless companies are only too eager to partner with them.
"This is potentially a multibillion-dollar market," said Napster Inc. President Brad Durea. "It's an incredible opportunity."
There's no question that cellular users are willing to pay for their entertainment. Ring tones have become a big business, with some 17 million users in the United States downloading musical clips every month, said Seamus McAteer, an analyst with market research firm M:Metrics. They're paying as much as $3 each for every ring tone on their list.
Those kind of numbers have emboldened entertainment companies to make big bets on the wireless market.
Recording giant Warner Music Group and MTV Networks announced Sunday that they're teaming up, with Warner providing the music and MTV offering the brief, under-four-minute-long videos that will be beamed to cellular phone subscribers.
Billboard magazine is launching a monthly service, initially with Cingular, where users can listen to music samples, review lists of top-rated tunes, look up concert schedules and download ring tones, all from one screen on their wireless phones. In first place this week on Billboard's list of "hot ringtones" is "Gold Digger" by hip-hop artist Kanye West.
Meanwhile, industry giants Verizon Wireless, Sprint Nextel and Cingular are expected to launch music download services within the next few months.
Even Napster, once the renegade of the music industry, has plans for a service in which subscribers can buy a song and download it to both their PC and their wireless phone. The company expects to launch its service within nine months, Durea said.
The latest surge in cellular entertainment can be credited to technical improvements in both cellular phones and the networks they run on, said Clint Wheelock, an analyst with the NPD Group. With larger and brighter screens, plenty of memory and powerful microprocessors, today's cell phones have become "mobile computing devices," Wheelock said. "They are at the level PCs were a few years ago."
The big cellular companies like Sprint Nextel, Verizon Wireless and Cingular Wireless are rapidly building fast networks that can push data at broadband speeds to those phones. After spending billions of dollars to build up those networks, the companies now need data-loving subscribers to help pay off those costs.
Some innovations, such as downloading entire songs to the phone via the wireless network, seem destined for success, experts say. "Mobile music will be big. People will spend money to have music on their cell phones," said Stephen Wellman, executive editor at Fierce Wireless, a cellular industry newsletter.
Games designed for wireless phones also are expected to surge. Such heavyweights as Electronic Arts Inc., Marvel Enterprises and THQ International are heavily involved in game development. One research group, In-Stat/MDR, predicts that game revenue will grow eightfold to $1.8 billion by 2009.
But experts are divided about the market for watching TV clips on a screen that's smaller than a soda cracker. "Nobody will want to watch TV on their cell phones," Wellman said. "The screens are just too small."
NPD analyst Wheelock, however, said TV cell phone services - which already feature clips and programming from CNN, ESPN and MSNBC - will find a niche, especially as the images become less jerky and more like regular TV.
Users, he said, might whip out their phones to watch a clip while waiting in line for a latte or to board a plane. "This won't be a replacement for TV at home, but it will be a supplement," he said. "We call it digital snacking."
For any services to catch fire with the public, however, they will have to become much simpler.
There are hundreds of different phone models in use, with varying capabilities. Many users don't even know if their phones can play ring tones, much less display video clips or download games. Said Wheelock, "This will be a source of a lot of confusion for a lot of consumers."
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